Hedge fund reinsurers show weakness
Friday, 07 08 2016, Category: Insurance and Reinsurance, Country: World
Hedge fund reinsurers (HFRs) have “lost momentum because of competitive pressures within the reinsurance market and the challenging investment environment,” according to S&P analysts.
Hedge funds have been increasingly joining forces with reinsurers by setting up off-shore reinsurance companies in jurisdictions like Bermuda and the Cayman Islands.
Their strategy includes targeting low-margin and low-volatility reinsurance business and allocating most of their capital to "alpha" generating hedge fund investments, the analysts said.
However, this investment strategy tend to be significantly riskier and consume considerably more capital than those typical of traditional reinsurers
Source: Intelligent Insurer